From building to area, and from smart to sustainable and stakeholders

-Van Gebouw naar Gebied, en van smart naar

sustainable en stakeholders

Lucas Carmody

Senior Manager,

Urban Development and Smart Cities

PwC

PwC’s Digital Services

Introduction

2

01 Drivers of change

02 The challenge

03 Urbanists and technologists

04 The emerging response

05 From building to area and from smart to sustainable

06 Why PwC?

01 Drivers of change

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A lot of people love cities; they’re centers of culture

and business and life.

Confidential information for the sole benefit and use of PwC’s client.

More than half the world’s population now lives in

cities, and that figure will go to about two-thirds of

humanity by the year 2050.

Cities are getting bigger.

In 1990 there were ten “mega-cities” with 10

million inhabitants or more. In 2014, there were 28

mega-cities, home to 453 million people.

The coming decades, this increasing

urbanization comes together with the

challenge of sustainable competitiveness: a

city’s ability to keep growing and developing

over time while keeping the city a livable place,

fostering social cohesion and

environmental quality.

Key challenges cities are facing during the coming decades:

In the Netherlands, we are facing a substantial need to invest in new infrastructure and buildings in the coming decades

ICT infrastructureEnergy transition

Sources: 1) EIB studie over de toekomst van de bouw: 1 miljoen woningen nodig in 2040, feb 2015; 2) Energierapport - Transitie naar Duurzaam,, Ministerie van Economische Zaken, 18 jan, 2016; 3) Heel Nederland van het gas af, hoe gaan we dat

doen? Duurzaamnieuws.nl, 4 juli 2017, 4) Koers 2025: Ruimte voor de stad, April 2016, 4) 4 juli 2017; 5) Roadmap Next Economy for the Metropolitan Region Rotterdam-The Hague: an example of transition governance, Jan Rotmans, March 2017

• 1 million new residential houses

needed until 2040, on top of

renewal

• Renovation : >55% of corporation

housing stock is over 35y old

• 71% of pension funds indicates a

wish to invest in new buildings for

elderly and

sheltered accommodation

• An entirely new, decentralized

smart energy grid structure will

unfold in the next decades

• Large-scale retrofitting of the built

environment required

• 25% of the houses must change gas

into alternative energy supply in

2030

• Electrifying current heating needs

10x the capacity of new energy in

20 years

• Challenges in sufficient alternative

supplies (e.g. data centers)

Real estate

• Increased demand for ICT

infrastructure to enable self

driving cars & smart mobility

systems, smart buildings, sensor

networks and new data centers

• Telecom: Fiber network

backbones; Densifying mobile

networks,

• Connecting street furniture

• Challenges in cyber security

• Incoming 5G roll out

Problem

• Climate change

• Resource scarcity

• Social inclusion

• Public safety

Solution

• Energy transition

• Smart utilities management

• Citizen engagement

• Surveillance, sensor and better urban design

02 The challenge

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New and

innovative

approaches from

outside the

traditional urban

domain is needed

8

Commercial real estate

Residential housing

City infrastructure

Public safety & emergency

services

Traditional domain of urban development

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9

Ecosystem of multiple

stakeholders and interests

New business models & integrated

value cases

Many interdependencies

between actors and sub-systems

Smart mobility solutions

Renewable energy, electrification

Sensor networks & smart solutions

Smart buildings

Circularity, zero emission

Citizen centric design, citizen involvement

Sustainability criteria (ESG/SDG)

New domain of urban development

Commercial real estate

Residential housing

City infrastructure

Public safety & emergency

services

Traditional domain of urban development

03 Urbanists and technologists

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TechnologistNew urban domain

Understand how digital technology can be applied to

existing systems to improve urban lives and address

urban issues

Understand how cities work and use traditional levers

of policy, urban planning and architectural design to

improve urban lives and solve urban issues

Slow and calculated, view the city more as a set of

social constructs and deeply ingrained behaviors that

take time to change and influence

Limited ability to understanding their end user

(e.g. pedestrian movement in a development,

neighborhood post development)

UrbanistTraditional urban domain

VS

Fast and impatient, view the city as a system of systems

and looking for ways of optimizing systems

Intimate understanding of their end user with ability to

generate big data and live insights

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Urbanist and technologist speak a different language

• Technologists prefer to approach problems

from first principles, rather than existing

practice.

• Urbanists, prefer existing practice, as a

mechanism to get things built in the system

that currently exists.

When tech doesn’t understand urban:

• technology is develop that is urban in

application but doesn’t actually make cities

better

• introducing new tech and smart city solutions

to problems that don’t exist or you don’t

properly understand

Case study 1 - Songdo, South Korea

Case study 2 - IBM and Portland

• predictive model for urban planning

• using historical data to generate innovative

policies for city planning

• result was promote active transport to reduce

obesity

When urban doesn’t understand tech:

• Uber

• Airbnb

• Sidewalk Labs

Lost in translationWhy integration between tech and urban isn’t so simple

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Who pays?Multiple stakeholders requires identifying value and how to monetize this value

We are giving you our data, what do we get back?

Local community

We are giving you our product/ service, what do

we get paid?

Tech company

We have to accommodate new technology, how do

we get paid?

Urban developer

How do we fund this untested technology on a

city wide-scale?

Public sector

04 The industry response

What has the response been by the traditional urban domain?

BuryBuild

• Buy and invest in proptech that

improves the way traditional built

environment sector operates and

introduces new revenue streams to

the existing business model.

• Build, some companies are investing

in their own dedicated proptech

investment and R&D facilities.

• Embracing digital disruption, urban

development companies are looking to

hire tech talent from outside the

urbanist mould.

Buy

• While there remains many in the sector

who have decided to bury their heads in

the sand.

• The sector is too large and fragment to

see true disruption.

• Despite talk of disruptive technologies

and technical innovations, urban

development remains fundamentally

unchanged.

• Where is the Uber, Amazon or

Booking.com? Unthinkable business

models remain relatively absent in the

real estate industry (except retail).

PwC’s Emerging Trends in Real Estate

Blurred lines – merging of old business models with new

Real estate into tech Tech into real estate

Multifamily properties that can be rented out on Airbnb

Platform that empowers retailers to digitize sales

Cloud-based platform allows landlords to track repair projects/vendors across

portfolio

VC fund and tech accelerator

Tech-based leasing and management

platform

Real time network for office space. Connecting growing teams and

profession looking for space.

Development of city region in Toronto through Sidewalk Labs

Modular high-end housing startup that could be potentially integrated with

Alexa technology.

Enables long-term tenants to sublease apartments

Tech fund invests in ‘real estate’ business

Partners with managers to provide co-working space/ workplace services

Plans to create a mixed-use campus town

05 From building to area, and from smart to sustainable

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BuildingIsolation and silos

AreaConnected precincts

TO

1. Put people first – Understanding how the

community uses existing spaces to inform new

solutions (e.g. infrastructure, facilities and

services)

2. Connections driven – create vibrant and

productive places where people want to live, work

and play

3. Partnership models – Municipalities and

market parties function as partners, together in

eco-systems with diverse stakeholder objectives

and interests (e.g. solutions are developed in

‘innovative partnerships’ in PPP models)

1. Siloed approach – Individual solutions (e.g.

energy, mobility, housing, communication) are

executed as individual projects

2. Single use – Companies offer individual products

and solutions for singular use

3. Individual business model – targeted at

maximizing profitability or position in the value

chain

Smart precincts provide a greater opportunity for sustainability

The next step is

going from

benchmarking self-

sufficient precincts

and from there,

precincts that can

export their energy

and water resources

to surroundings

neighbourhoods

While there are

barriers preventing

investment in

sustainable

technology at a large

scale, it’s at the

precinct level that

we go from barriers

to benchmarks

What is the point of

working, living or

learning in a 5 star

Green Building if

people are leading 1

star lives once they

leave the building?

Barangaroo – Sydney’s largest commercial urban renewal project

A model for precincts we can go from

neutral to positive.

22 ha site on Sydney Harbour featuring – a

mix of uses including recreational and

public park lands, residential, hotel, retail

and commercial. Key sustainability

features:

• Climate positive – generates more

energy than used, recycle and export

more water than is used, and recycle

more waste than is generated.

• Onsite power, cooling, water and

waste management to reduce

footprint.

• Recycling 99 per cent of

construction waste

• Social sustainability – a positive

social legacy that benefits the wellbeing

of everyone in the community. This has

resulted in establishing and delivering at

least 50 successful community learning

and wellbeing programs

Area development is transforming into a ‘new normal’ in which topics like zero-emission, energy neutrality, circularity, ‘smart’ and ‘sustainable’ are becoming part of tender-demands that must to be proven by contractors

• The individual dreams of the project partners in the area have been translated into a joint ambition for ArenAPoort.

ArenAPoort an example for sustainable area development

Amsterdam Arena has the ambition to make ArenAPoort a worldwide example for smart and sustainable area development.

Sustainability objectives include circularity, energy neutrality, citizen involvement, safety and accessibility

BajeskwartiesAmsterdam:

Energy neutral & circular

Brainport Smart District: Helmond

‘Smartest neighborhood of the world’

Toronto Waterfront-Sidewalks Lab

high-tech neighborhood

Milan Innovation District

Transformation of the Milan2015 Expo

And we see many other examples of transformations towards smart and sustainable area development, a.o:

Stockholm Royal SeaportNext-gen, sustainable urban

district

To tackle the key challenges for true realization of future proof sustainable cities

Integrated solution, overarching silos

Holistic approach with cross over

effects

People first -stakeholder

orchestration and balancing interests

Understanding the business models of

your partners

Capturing the real value of the project

Understand how you can measure

the impact of your investments

• Integrating point solutions of different layers of the value chain in 1 proposition

• 1 integrated solution,overarching silos and combining all needed skills

• Addressing big urban challenges within area development plans to improve quality of life in cities on 8 main themes

• Urban area development with new innovative solutions in 1 E2E solution

• Realizing cross-over effects

• Orchestration of external stakeholder landscape

• Balancing commercial and public interests

• Integrated business case• Managing stakeholder

field across the municipality and in Public-private partnership

• Improved prospect to value increase

• Social effects will be fact based demonstrable, resulting in:

• Lower risk estimation • Improved position to

attract equity • Broader range of

optional equity partners (green lease, DJSI)

• Able to provide assurance on social outcomes and effects (KPIs, and effect measuring both quantitative + qualitative)

• Realize visible commercial and social effects

• Contribute to business and governmental SDG targets

• Deal value: measureable results, business case realization (commercial and social)

• Life cycle approach: E2E approach: connecting up front city objectives with monitoring of effects during area maintenance

• Both commercial and social objectives as starting point

• Translation in clear KPI’s

• Data drivenmeasurement

• Link with SDGs and available measurement systems within the municipality

06 Why PwC?

PwC bridges and balances the divide between urban and tech

• PwC are a reflection of the new and old urban

domain

• We have diverse mix of experienced technologists

and urbanists (see digital services vs. capital

projects and real estate)

• Our technologist work with our industry experts to

help clients from all sectors embrace digital

disruption

• Our urbanists work across each phase of the urban

infrastructure delivery cycle, for both the public

and private sector

• We understand how to bring this together, balance

objectives and create large scale value cases and

business models that work for all parties

Contact us

25

Bart KruGrade

PwC [Country]

Phone: +00 00 0000-0000E-mail:

NameGrade

PwC [Country]

Phone: +00 00 0000-0000E-mail:

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